#1
Which market structure is characterized by a large number of buyers and sellers, homogeneous products, and ease of entry and exit?
Perfect Competition
ExplanationMany buyers and sellers, identical products, easy entry/exit.
#2
In which market structure do a few large firms dominate the market, and there are barriers to entry for new firms?
Oligopoly
ExplanationDominance by a few firms, entry barriers.
#3
In a perfectly competitive market, what is the shape of the demand curve faced by an individual firm?
Horizontal
ExplanationFlat demand curve.
#4
What is the key characteristic of a monopoly market structure?
Single seller
ExplanationOne seller dominating the market.
#5
In a perfectly competitive market, what is the relationship between marginal revenue and price?
Marginal revenue equals price
ExplanationEqual due to market competitiveness.
#6
What is a distinguishing feature of a monopolistic competition market structure?
Many sellers
ExplanationNumerous sellers with differentiated products.
#7
What is an externality in economics?
The unintended side effects of economic activities affecting third parties
ExplanationUnintended effects on third parties.
#8
Which market structure is characterized by a few firms producing similar but not identical products, and there is product differentiation?
Monopolistic Competition
ExplanationFew firms, similar but differentiated products.
#9
Which of the following is a characteristic of a natural monopoly?
High entry barriers
ExplanationSignificant barriers to entry.
#10
What is the primary goal of antitrust laws in the context of market structures?
To promote fair competition and prevent anticompetitive behavior
ExplanationEnsuring fair competition, preventing anticompetitive behavior.
#11
In a monopolistic competition, what role does product differentiation play?
It allows firms to distinguish their products
ExplanationHelps in product distinction.
#12
What is the tragedy of the commons in the context of externalities?
The overuse and depletion of a shared resource
ExplanationExcessive use leading to resource depletion.
#13
What is a key feature of a contestable market?
Ease of entry and exit
ExplanationLow barriers to entry/exit.
#14
What is the tragedy of the commons?
A situation where a common resource is overused and depleted due to individual self-interest
ExplanationOveruse of shared resources due to self-interest.
#15
In an oligopoly, firms often engage in strategic behavior, which refers to:
Actions taken to influence rivals' behavior
ExplanationManipulative actions against competitors.
#16
How do positive externalities impact the efficiency of a market?
They lead to underproduction
ExplanationResult in less production than socially optimal.
#17
Which market structure exhibits interdependence among firms in decision-making?
Oligopoly
ExplanationMutual influence in decisions.
#18
What is a Pigovian tax used to address in the context of externalities?
To discourage consumption
ExplanationDiscouraging overconsumption.
#19
In an oligopoly, what is the term used to describe a situation where firms mimic each other's pricing and output decisions?
Price leadership
ExplanationImitating competitors' strategies.
#20
How does a subsidy address a negative externality in the market?
By internalizing the externality
ExplanationCompensates for negative effects.